RBS mulls buying back shares to cut government stake

Jessica Morris
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RBS is yet to shake off issues relating to its past misconduct (Source: Getty)

RBS is considering buying back its own shares to help the UK government whittle down its 73 per cent stake more quickly, according to the bank's boss.

"I would rather participate as the government is selling down ... I think it's probably the best thing for all investors, where excess capital goes back through buy-backs," Ross McEwan, chief executive of RBS, told the Bank of America Merrill Lynch banking & insurance conference in London.

The government sold a 5.4 per cent stake in the bank at a loss of £1bn in August, its first major share sale since taking a stake in RBS back in 2008. The Conservatives have targeted the sale of three-quarters of its stake in the next five years, potentially reaping a total of £16bn for the Treasury.

Read more: Government could raise £16bn from RBS sale

McEwan added that the bank is on track to meet key financial targets, but it's yet to shake off issues relating to past misconduct. UK regulators are investigating its treatment of struggling small firms, and across the pond enforcement agencies are probing claims RBS misled investors in mortgage-backed securities.

"The potential conduct and litigation settlements have to be factored into this progress," he said. "We're dealing with these as quickly and as prudently as possible but they will continue to be a drag on this business for the next six to 12 months."

Shares in RBS rose 0.5 per cent to 311.1p per share in late afternoon trade.

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